(See Problem 11

question 18

Multiple Choice

(See Problem 11.) Wilfred's expected utility function is , where p is the probability that he consumes c₁ and 1 - p is the probability that he consumes c₂. Wilfred is offered a choice between getting a sure payment of $Z or a lottery in which he receives $2,500 with probability .40 or $6,400 with probability .60. Wilfred will choose the sure payment if

• A) Z > 4,624 and the lottery if Z < 4,624.
• B) Z > 3,562 and the lottery if Z < 3,562.
• C) Z > 5,512 and the lottery if Z < 5,512.
• D) Z > 6,400 and the lottery if Z < 6,400.
• E) Z > 4,840 and the lottery if Z < 4,840.

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Definitions:

Adaptive Behaviors

Behaviors that are learned or modified in response to changes in environment, allowing an individual or species to survive and reproduce.

Survival

The act of continuing to live or exist, especially in spite of challenging conditions or threats.

Reproduction

The biological process by which new individual organisms are produced from their parents.

Drive

An internal motivational state created by physiological or psychological needs, compelling an individual towards specific behaviors or goal attainment.